What is a decent minimum wage?

[jmcrae]

Well give a number. What minimum wage do you think is a " decent" wage?

It would depend on market conditions. The government wants your employees to be able to be safely housed (ie: not in an illegal suite where they would burn alive with no escape if there were a fire), pay for utilities, buy groceries, and obtain transportation. A minimum wage would be the wage that provides those basic things.

In some markets, you could do that on $3.00 an hour; in other markets, it might take $8.00 an hour.

 

[sedonaman]

It would depend on market conditions. The government wants your employees to be able to be safely housed …, pay for utilities, buy groceries, and obtain transportation. A minimum wage would be the wage that provides those basic things.

In some markets, you could do that on $3.00 an hour; in other markets, it might take $8.00 an hour.

The basic premise is not necessarily true. In fact, it is true in only a small number of cases.

Minimum wage jobs are mostly entry level jobs for single people, not jobs for wage-earners supporting a single income family. If you as an employer paid a single person a lower wage than a married person, you would quickly find yourself without any lower wage employees, the others having bailed for what they considered equal pay for equal work.

I will agree that minimum wage is insufficient for one wage-earner to raise a family of four, but that is just not a realistic scenario. For one thing, the middle class family almost without exception is a two-wage-earner family. Should those families work to get the minimum raised so the lower income earners can live on only one wage-earner? A minimum wage of $5 per hour will produce an annual income of $10,000. Two minimum wage earners will produce $20,000, not a grand income but only a little below median ($26,000). Such a family would pay only $100 in federal income tax and probably $ 0 state income tax, and receive $3,250 in the form of a federal income tax credit (refund), which means they would have a real income of $23,150, or an effective minimum wage of $11.58. This does not include other aid, public and private, for which they might qualify (e.g., food stamps). The second thing is that most minimum wage jobs are held by single people who are part-time students or those full-time sharing living accommodations with another while they work their way up to a higher paying job.

And then, some people are just not worth $5 per hour, and most of these cannot find work. These are the ones who truly need our help. However, they are not helped by artificially raising the minimum, because no one worth less than $5 per hour will be hired at $5.50. But suppose an employer did act in a “socially just” way and paid $5 for an employee worth less. It won’t be very long before the other $5 employees notice and reduce their productivity to the level of the one worth less. This is what happens under communism.

Besides pricing more workers out of the market, there is another problem with artificially increasing the minimum wage. Suppose the minimum is $5 per hour, and you yourself started at the minimum but have been given annual raises and are now earning $6. Further suppose you work hard to obtain “social justice” by having the law increase it to $5.50 per hour. Will you still be satisfied with $6 per hour? Probably not; you will want at least $6.50. Suppose you get your raise of $6.50 per hour. Are your superiors earning $6.50 going to remain happy? No, they will want at least $7.00. So, everyone wants a raise, and if everyone gets a raise, where is the extra money going to come from? Inflation, that’s where, because the employer doesn’t want a reduction in his own income, so higher prices for everyone! And the social justice for the elderly will be reduced through reduction in the buying power of their savings.The minimum wage employee will have seen his gain virtually wiped out. The only people who can escape this are those who are in a position to pass on higher prices to those below them; the rest [those you tried to help] will be the ones who get hurt the most. How many times has the minimum wage been raised since its inception in 1938, and how many times has it ever worked?

The economic fact is the only way to get a real raise in pay is to increase your value to your employer, and if he won’t pay it, to find another who will.

 

[markbrumbaugh]

It should be over $250,000/year so that everyone can achieve social justice by paying taxes.

 

[ThomasToo]

Minimum wage jobs are mostly entry level jobs for single people, not jobs for wage-earners supporting a single income family. If you as an employer paid a single person a lower wage than a married person, you would quickly find yourself without any lower wage employees, the others having bailed for what they considered equal pay for equal work.

That wasn’t always the case. The standard of living in America has changed drastically and the minimum wage just can’t (and shouldn’t have to) keep up.

John E Schwarz in Illusions of Opportunity, ‘In the early 1950s, fully two fifths of American households had no automobile, about a third did not have a private telephone or a television, and the homes of about a third of all Americans were dilapidated or were without running water or a private toilet and bath. Only a small minority of families enjoyed such basics as a mixer or had a hot-water heater.’ This doesn’t include much more limited levels of education (compare levels of college graduation then and now).****

 

[buffalo]

Since most are entry level jobs it should be at the level that creates the most opportunity for young people to get their start and actually learn how to hold a job and a taste of the real world. It should be set at a level that gives employers incentive to take the risk as well as training costs.

 

[jmcrae]

Since most are entry level jobs it should be at the level that creates the most opportunity for young people to get their start and actually learn how to hold a job and a taste of the real world. It should be set at a level that gives employers incentive to take the risk as well as training costs.

This makes perfect sense, to me.

It should allow a single person with little or no job experience to take a low-rent bachelor apartment that has basic utilities included (water, sewer, electric), take the bus to work and back, and learn by experience how to work and how to live independently from parents and other relatives.

 

[Big_Ro]

The basic premise is not necessarily true. In fact, it is true in only a small number of cases.

Minimum wage jobs are mostly entry level jobs for single people, not jobs for wage-earners supporting a single income family. If you as an employer paid a single person a lower wage than a married person, you would quickly find yourself without any lower wage employees, the others having bailed for what they considered equal pay for equal work.

I will agree that minimum wage is insufficient for one wage-earner to raise a family of four, but that is just not a realistic scenario. For one thing, the middle class family almost without exception is a two-wage-earner family. Should those families work to get the minimum raised so the lower income earners can live on only one wage-earner? A minimum wage of $5 per hour will produce an annual income of $10,000. Two minimum wage earners will produce $20,000, not a grand income but only a little below median ($26,000). Such a family would pay only $100 in federal income tax and probably $ 0 state income tax, and receive $3,250 in the form of a federal income tax credit (refund), which means they would have a real income of $23,150, or an effective minimum wage of $11.58. This does not include other aid, public and private, for which they might qualify (e.g., food stamps). The second thing is that most minimum wage jobs are held by single people who are part-time students or those full-time sharing living accommodations with another while they work their way up to a higher paying job.

And then, some people are just not worth $5 per hour, and most of these cannot find work. These are the ones who truly need our help. However, they are not helped by artificially raising the minimum, because no one worth less than $5 per hour will be hired at $5.50. But suppose an employer did act in a “socially just” way and paid $5 for an employee worth less. It won’t be very long before the other $5 employees notice and reduce their productivity to the level of the one worth less. This is what happens under communism.

Besides pricing more workers out of the market, there is another problem with artificially increasing the minimum wage. Suppose the minimum is $5 per hour, and you yourself started at the minimum but have been given annual raises and are now earning $6. Further suppose you work hard to obtain “social justice” by having the law increase it to $5.50 per hour. Will you still be satisfied with $6 per hour? Probably not; you will want at least $6.50. Suppose you get your raise of $6.50 per hour. Are your superiors earning $6.50 going to remain happy? No, they will want at least $7.00. So, everyone wants a raise, and if everyone gets a raise, where is the extra money going to come from? Inflation, that’s where, because the employer doesn’t want a reduction in his own income, so higher prices for everyone! And the social justice for the elderly will be reduced through reduction in the buying power of their savings.The minimum wage employee will have seen his gain virtually wiped out. The only people who can escape this are those who are in a position to pass on higher prices to those below them; the rest [those you tried to help] will be the ones who get hurt the most. How many times has the minimum wage been raised since its inception in 1938, and how many times has it ever worked?

The economic fact is the only way to get a real raise in pay is to increase your value to your employer, and if he won’t pay it, to find another who will.

Sorry, don’t mean to nitpick, but there is another way to increase your wage. It happens when there is full employment. By most standards, that happens when unemployment gets somewhere below 3-5%. Now, so I’m clear, I think it has to be the real unemployment rate rather than the somewhat jaundiced rate produced by the Department of Labor. It does not include those individuals that have “given up” looking for work which is defined as no longer being registered with their unemployment dept. which usually occurs when their benefits run out. The real rate takes the number of people eligible for work and the number employed. The difference expressed as a percentage of the total number of eligible workers is the real rate. Admittedly, an oversimplified explanation. The last time I looked the real rate was somewhere around 16%. During the Great Depression (IDK what was so great about it), the estimate is that some 25% of the labor force was unemployed. I say esitmated because there was no official report by the governement. In fact, one of the outgrowths of the GD is that it became clear that the governement needed a way to measure various economic factors (i.e., GDP, unemployement, etc) in order to avoid another crash.

Under a scenario in which the economy is growing and the rate at which individuals reach working age is less than the rate of demand for new employees, there would be a demand lead wage increase. In other words, workers could demand a higher wage due to scarcity of labor. The reality is that real wages adjusted for inflation have not gone up since the early 70’s except for a very small and short lived increase during the 90’s. The economy was booming and unemployment was very low. The tech bubble popping and then a few years later the real estate market collapse put an end to that.

 

[flyingfish]

A decent minimum wage should be such that if a person works full time they are able to afford a decent place to live, healthy food, transportation, healthcare for themselves and their children, education for their children. They should not have to work overtime or take another job to do these things.

 

[ThomasToo]

A decent minimum wage should be such that if a person works full time they are able to afford a decent place to live, healthy food, transportation, healthcare for themselves and their children, education for their children. They should not have to work overtime or take another job to do these things.

Isn’t that around $12 an hour or more (depending on how we define ‘decent,’ ‘healthy,’ ‘transportation,’ and ‘education’?

 

[catharina]

It would depend on market conditions. The government wants your employees to be able to be safely housed (ie: not in an illegal suite where they would burn alive with no escape if there were a fire), pay for utilities, buy groceries, and obtain transportation. A minimum wage would be the wage that provides those basic things.

In some markets, you could do that on $3.00 an hour; in other markets, it might take $8.00 an hour.

Where?
In this country?
In what part of this country?

Cost Of Living is an enormous variable.

 

[Newbie2]

It should be over $250,000/year so that everyone can achieve social justice by paying taxes.

LOL. The way taxes are going up, the Feds should be able to handle that through giveouts.

A decent minimum wage should be such that if a person works full time they are able to afford a decent place to live, healthy food, transportation, healthcare for themselves and their children, education for their children. They should not have to work overtime or take another job to do these things.

If I had to pay all my employees based on that definition, I’d have to lay off half of them.

While that is a nice ideal, simple economics dictate it as impossible. You can’t pay a McDonald’s employee $25 plus bennies for flipping hamburgers and sell hamburgers for a buck or two each. Six bux apiece and $10 for a happy meal, that could work, except nobody would pay $6.00 for a hamburger that now costs $0.89, and you’d have to lay off that $25 an hour employee.

Again, simple economics. There aren’t as many “living wage” jobs available as there are people who want them. There will always be poor, middle class and rich. Even if we were to redistribute the weatlh of the rich (socialism), such has not been shown to work. Capitalism, on the other hand, has been successful every time it has been attempted.

 

[ThomasToo]

LOL. The way taxes are going up, the Feds should be able to handle that through giveouts.

If I had to pay all my employees based on that definition, I’d have to lay off half of them.

While that is a nice ideal, simple economics dictate it as impossible. You can’t pay a McDonald’s employee $25 plus bennies for flipping hamburgers and sell hamburgers for a buck or two each. Six bux apiece and $10 for a happy meal, that could work, except nobody would pay $6.00 for a hamburger that now costs $0.89, and you’d have to lay off that $25 an hour employee.

Again, simple economics. There aren’t as many “living wage” jobs available as there are people who want them. There will always be poor, middle class and rich. Even if we were to redistribute the weatlh of the rich (socialism), such has not been shown to work. Capitalism, on the other hand, has been successful every time it has been attempted.

I don’t know how often the indicated statement above, that is to say laissez-faire capitalism has been universally successful. I would, in fact, probably argue much the opposite.

 

[flyingfish]

While that is a nice ideal, simple economics dictate it as impossible. You can’t pay a McDonald’s employee $25 plus bennies for flipping hamburgers and sell hamburgers for a buck or two each. Six bux apiece and $10 for a happy meal, that could work, except nobody would pay $6.00 for a hamburger that now costs $0.89, and you’d have to lay off that $25 an hour employee.

Again, simple economics. There aren’t as many “living wage” jobs available as there are people who want them. There will always be poor, middle class and rich. Even if we were to redistribute the weatlh of the rich (socialism), such has not been shown to work. Capitalism, on the other hand, has been successful every time it has been attempted.

Well, I’m no economist, but the poor in Canada and Europe are much better off than in the States. Canadian unemployment is lower than American unemployment. It’s certainly possible to pay a wage such that a person doesn’t have to work multiple jobs just to scrape by.

Why is it that places like Canada, Scandinavian countries are ranked as better places to live than the US?

The US is a better place to live only if you’re at the very top, which by definition will always be a tiny percentage of society.

Even if every single person is very smart, and very hardworking, until we have robots to do everything for us someone will still have to flip burgers, work construction, work in factories, work in service jobs and so on. Their work is essential to society’s survival and success, they should be paid fairly for it.

 

[ThomasToo]

Well, I’m no economist, but the poor in Canada and Europe are much better off than in the States. Canadian unemployment is lower than American unemployment. It’s certainly possible to pay a wage such that a person doesn’t have to work multiple jobs just to scrape by.

Why is it that places like Canada, Scandinavian countries are ranked as better places to live than the US?

The US is a better place to live only if you’re at the very top, which by definition will always be a tiny percentage of society.

Even if every single person is very smart, and very hardworking, until we have robots to do everything for us someone will still have to flip burgers, work construction, work in factories, work in service jobs and so on. Their work is essential to society’s survival and success, they should be paid fairly for it.

Isn’t this more of an argument for an expanded welfare state (e.g. socialized medicine) than the minimum wage?

It also discounts the fact that most Scandinavian countries is much more homogenized in many ways than contemporary American society.

I also am going to question that most minimum wage positions are ‘essential to society’s survival’ since most are basic service sector jobs like bag boy I don’t know how ‘essential’ I’d call them unless you mean that they keep people paid so they can pump money into the economy but if you only mean that someone could just pay them to do nothing.

 

[Newbie2]

I don’t know how often the indicated statement above, that is to say laissez-faire capitalism has been universally successful. I would, in fact, probably argue much the opposite.

Perhaps I overstated it. Let’s say “Christian” Captialism.

Well, I’m no economist, but the poor in Canada and Europe are much better off than in the States. Canadian unemployment is lower than American unemployment. **It’s certainly possible to pay a wage such that a person doesn’t have to work multiple jobs just to scrape by. **

How??? I own a small business and have 6 employees. I simply cannot pay them each a “living wage”, even if I took the same wage as a business owner (which I would argue was unfair, since I have so much more invested in my business in terms of time, work, sweat and money). There is simply not enough money coming in to do so. It’s impossible. I’d pay then all $20 an hour if I could. Please tell me how to do this.

Why is it that places like Canada, Scandinavian countries are ranked as better places to live than the US?

What does this have to do with what we are talking about?

The US is a better place to live only if you’re at the very top, which by definition will always be a tiny percentage of society.

“Better” how? More freedom? I think not, if that’s part of “better”. I’m in the middle, all of my friends and family are in the middle (and lower-middle), and you say we’d be better off in Canada?? No thanks. If I need a CAT scan, I can get one today. Not so for most Canadians, at least as far as I can tell.

Even if every single person is very smart, and very hardworking, until we have robots to do everything for us someone will still have to flip burgers, work construction, work in factories, work in service jobs and so on. Their work is essential to society’s survival and success, they should be paid fairly for it.

I agree, but what is “fair”? If I can only afford to pay 6 employees a maximum of $10 an hour, do you consider that “fair”. Would you consider it “fair” if I laid off 3 of them so that the rest could make $20 and hour and do twice the work?

It’s clear to me that you have little or no experience running a real business in the real world. Am I correct?

 

[flyingfish]

Isn’t this more of an argument for an expanded welfare state (e.g. socialized medicine) than the minimum wage?

Maybe, but either way the money to pay for socialized medicine, cheap higher education would be coming from the richer folk.

It also discounts the fact that most Scandinavian countries is much more homogenized in many ways than contemporary American society.

Why do you think this is relevant?

I agree, but what is “fair”? If I can only afford to pay 6 employees a maximum of $10 an hour, do you consider that “fair”. Would you consider it “fair” if I laid off 3 of them so that the rest could make $20 and hour and do twice the work?

It’s clear to me that you have little or no experience running a real business in the real world. Am I correct?

I’ve never owned a business, or ran someone’s business. I mean, I can see the issue you’re presenting. Again, I’m not an economist, so I don’t know how a higher minimum wage would affect things.

It’s possible also that if more people got paid more, they’d have more money to spend, and the services/products your business is providing would be more in-demand and you could afford more employees at a higher wage.

As far as I recall, statistically raising the minimum wage does not increase unemployment.

 

[markomalley]

It would depend on market conditions. The government wants your employees to be able to be safely housed (ie: not in an illegal suite where they would burn alive with no escape if there were a fire), pay for utilities, buy groceries, and obtain transportation. A minimum wage would be the wage that provides those basic things.

In some markets, you could do that on $3.00 an hour; in other markets, it might take $8.00 an hour.

Since this is a “should” question, let us look at it from a theological point of view.

Pope Leo XIII defined it as follows in Rerum Novarum:

46. If a workman’s wages be sufficient to enable him comfortably to support himself, his wife, and his children, he will find it easy, if he be a sensible man, to practice thrift, and he will not fail, by cutting down expenses, to put by some little savings and thus secure a modest source of income.

​

I don’t see much of a better basic definition to work from anywhere.

So let’s go from there:

1. A workman’s wages should be sufficient to enable him comfortably to support himself, his wife, and his children.

Does that mean that a husband with a family should be paid more than a wife producing a second income? I would think the answer should be yes.

Does that mean that a husband with a family should be paid more if he has a larger family (in other words, receive additional wages for additional children)? I think that this makes some sense.

Should a teenager out making extra spending money be entitled to the same amount of money as a family man? Well, no. After all, his expenses are not nearly the same as a family man’s expenses.

Of course, we wouldn’t be able to do so, as a job should pay the same for a worker no matter what his marital status or family status. And, in fact, many of the “equal work for equal pay” lawsuits that have occurred in this country attest to this fact.

But isn’t that, in fact, what Rerum Novarum is saying?

Imagine a world that was this way: where family men could comfortably support his family with a decent income (not extravagant, but decent). Would that not be the Church’s vision of real social justice?

Then, maybe, some of the women who are forced into the workplace to provide extra money would be able to stay at home and take care of her family. If the women who are currently in the workforce by need and not desire would be able to leave, what kind of impact would that have on unemployment rates?

My question for the “social justice” types is this: would you support such a thing?

 

[PaulinVA]

What is minimum wage for? It isn’t to support a family - it can’t be.

Newbie touched on it. You can only pay your employees proportionally to what your business makes. If the workers demand too much, or the government mandates they make too much, the business goes bankrupt.

How much of every GM car used to go for retiree health care? I think it was/could still be $1500 per car. That comes from unrealistic expectations.

Now, I think it’s wrong for businesses to take everything overseas at the expense of the American worker. But, at the same time, the American worker can’t demand so much that going overseas is the only way for the company to survive.

---

MarkOmalley - I would never support a system where workers are paid commensurate to how many people they are providing for, versus what they actually merit. That is a recipe for mediocrity.

 

[Newbie2]

I’ve never owned a business, or ran someone’s business. I mean, I can see the issue you’re presenting. Again, I’m not an economist, so I don’t know how a higher minimum wage would affect things.

It’s possible also that if more people got paid more, they’d have more money to spend, and the services/products your business is providing would be more in-demand and you could afford more employees at a higher wage.

As far as I recall, statistically raising the minimum wage does not increase unemployment.

At some rate, it has to increase unemployment. The question is, what is that rate. I’d say, based on what a “living wage” is, there simply are jobs where the ability of the employer to pay such a wage is impossible.

There are so many factors involved is determining the feasibility of a “fair” wage. I’d argue that in a free society, it is based on the market. You’re right when you say that if the services that my business become more in demand that I could charge more and pay my employees more.

Not to mention the way things are structured, the more my employees make, the more my business has to pay in taxes as a percentage of our gross income. So an increase of a pay rate from $10/hour to $20/hour costs the business more than an additional $10 per employee per hour.

However, I think you have it backwards. The demand and increase in business would have to happen first, at least from my perspective, before I could start increasing their wages. If it was mandated that everyone pay their employees $20 an hour, I guarantee you that it would not translate into an increase in business for me sufficient for me to pay my employees $20 an hour.

Neither of us are economists, for sure, but I think we’ll agree that even the economists don’t really understand a national or global economy.

 

[ThomasToo]

Maybe, but either way the money to pay for socialized medicine, cheap higher education would be coming from the richer folk.

Without the data in front of me I would guess that since every other industrialized country pays substantially less on medical care per capita then the United States that the money could very well be coming from everyone. Whether or not it can be said to be disproportionately coming from richer people is another question which I cannot answer.

Why do you think this is relevant?

Because you asked ‘why is it that places like Canada, Scandinavian countries are ranked as better places to live than the US?’ I think that differences in minimum wage are hardly the tip of the iceberg; amongst many other factors homogeneity is an important part of the issue.